How Covid Took Niche Private Equity Deals Mainstream

Private equity is about buying and selling companies, and it’s a business that runs on borrowed money. Buying, selling and borrowing all were complicated last year by market turmoil caused by the pandemic, as were payouts to investors. PE firms responded by turning to unorthodox or little-used techniques to reshape the ways an ever-bigger slice of the business world runs.

The asset class has seeped into every aspect of the world we live in, backing companies in industries ranging from music to technology to health care. Total money managed in private markets, including private equity and debt funds, hit $7.4 trillion by the start of 2021, up 5.1% from a year before, data from McKinsey & Co. showed. Private equity has proved especially popular with institutional investors including pension funds and insurers, who are able to lock capital away for many years in expectation of stock market-beating returns. In the U.S., close to 9 million people work for PE-owned companies, according to the American Investment Council.